U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

[x] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: 	MARCH 31, 2001

[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission file number 0-17232

CAPITAL RESERVE CORPORATION

(Exact name of small business issuer

as specified in its charter)

|COLORADO                        |  |  | 84-0888594         
|------------------------------- |  |  | -------------------
|(State or other jurisdiction of |  |  | (IRS Employer      
|incorporation or organization   |  |  | Identification No.)

335 25thSTREET, S.E.

CALGARY, ALBERTA, CANADA T2A 7H8

(Address of principal executive offices)

(403) 204-0260

(Issuer's telephone number)

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.

Yes _X_ No __

State the number of shares outstanding of each of the issuer's classes of common equity, as of the last practicable date:

6,864,235 shares of common stock, no par value, as of May 9, 2001.

Transitional Small Business Disclosure Format (check one): Yes___ No _X_

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-QSB and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a
fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the three month periods ended March 31, 2001 and 2000 are not necessarily indicative of the results that may be expected for the year ending
December 31, 2001. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2000.



Independent Auditors' Review

Unaudited Consolidated Financial Statements

Balance Sheet

Statements of Operations

Statements of Stockholders' Equity

Statements of Cash Flows

Notes to Unaudited Consolidated Financial Statements

Review Report of Independent Certified Public Accountants

Board of Directors - Capital Reserve Corporation

We have reviewed the accompanying consolidated balance sheet of Capital Reserve Corporation as of March 31, 2001 and the related statements of operations for the three month period then ended and statement of cash flow for three month
period ended March 31, 2001, in accordance with Statements of Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of
Capital Reserve Corporation.

A review of interim financial statements consists principally of inquiries of Company personnel responsible for financial matters and analytical procedures applied to financial data. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with United States generally accepted accounting principles.

Miller and McCollom



By: /s/Miller and McCollum

Lakewood, Colorado

May 11, 2001

CAPITAL RESERVE CORPORATION

AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET AS AT

|ASSETS                                                                                                                                | As at March 31, 2001(unaudited) |             | As at December 31, 2000
|------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | ----------- | -----------------------
|Current assets                                                                                                                        |                                 |             |                        
|Cash                                                                                                                                  | $                               | 22,564      | $                      
|Accounts receivables                                                                                                                  |                                 | 70,682      |                        
|Loans receivables(Note 2)                                                                                                             |                                 | 225,622     |                        
|Prepaid expenses                                                                                                                      |                                 | 53,752      |                        
|                                                                                                                                      |                                 |             |                        
|Total Current Assets                                                                                                                  |                                 | 372,620     |                        
|                                                                                                                                      |                                 |             |                        
|Investments(Note 3)                                                                                                                   |                                 | 1,126,840   |                        
|                                                                                                                                      |                                 |             |                        
|Fixed assets(Note 4)                                                                                                                  |                                 |             |                        
|Oil and gas leases (net of accumulated
depletion of $55,037)(Note 1)                                                                  |                                 | 679,402     |                        
|Land                                                                                                                                  |                                 | 720,852     |                        
|Buildings (net of accumulated depreciation of $35,668)(Note 1)                                                                        |                                 | 1,532,305   |                        
|Office equipment and computers (net of accumulated depreciation of $6,750)(Note 1)                                                    |                                 | 18,462      |                        
|                                                                                                                                      |                                 |             |                        
|Total fixed assets                                                                                                                    |                                 | 2,951,021   |                        
|                                                                                                                                      |                                 |             |                        
|Total assets                                                                                                                          | $                               | 4,450,481   | $                      
|                                                                                                                                      |                                 |             |                        
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                 
|                                                                                                                                      |                                 |             |                        
|Current liabilities                                                                                                                   |                                 |             |                        
|Accounts payable                                                                                                                      | $                               | 86,593      | $                      
|Accrued expenses                                                                                                                      |                                 | 37,068      |                        
|Current portion of long-term debt                                                                                                     |                                 | 149,295     |                        
|Total current liabilities                                                                                                             |                                 | 272,956     |                        
|                                                                                                                                      |                                 |             |                        
|Long-term liabilities                                                                                                                 |                                 |             |                        
|Advances payable(Note 5)                                                                                                              |                                 | 229,372     |                        
|Future site restoration                                                                                                               |                                 | 383         |                        
|Long-term debt(Note 6)                                                                                                                |                                 | 1,395,285   |                        
|Total long-term liabilities                                                                                                           |                                 | 1,625,040   |                        
|                                                                                                                                      |                                 |             |                        
|Total liabilities                                                                                                                     |                                 | 1,879,996   |                        
|                                                                                                                                      |                                 |             |                        
|Stockholders' equity(Note 2)                                                                                                          |                                 |             |                        
|Class A Common Stock - authorized 20,000,000 shares of no par value; 6,864,235 and 2,179,865 issued and outstanding for 2000 and 1999 |                                 | 6,390,975   |                        
|Accumulated Deficit                                                                                                                   |                                 | (3,838,489) |                        
|                                                                                                                                      |                                 |             |                        

|Total stockholders' equity |  | 2,552,485 |  | 2,516,470
|-------------------------- |  | --------- |  | ---------
|                           |  |           |  |          

|Total liabilities and stockholders' equity                                                                                                                              | $ | 4,450,481 | $ | 4,499,897
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | --------- | - | ---------
|                                                                                                                                                                        |   |           |   |          
|The notes to these financial statements should be read in conjunction with the
Unaudited Consolidated Financial Statements for the fiscal quarter ended March 31, 2001.

CAPITAL RESERVE CORPORATION

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2001 AND 2000

Unaudited

|                                                             | For the Quarters Ended March 31,
|------------------------------------------------------------ | --------------------------------
|                                                             | 2001                            
|Net sales and gross revenue                                  |                                 
|Petroleum and natural gas                                    | $                               
|Rental properties                                            |                                 
|                                                             |                                 
|Costs and expenses applicable to sales and revenue           |                                 
|Royalties                                                    |                                 
|Production and operation                                     |                                 
|Depletion, depreciation and amortization                     |                                 
|                                                             |                                 
|Gross profit                                                 |                                 
|                                                             |                                 
|Expenses                                                     |                                 
|Legal                                                        |                                 
|Consulting                                                   |                                 
|Directors Fees                                               |                                 
|Other Administrative expenses                                |                                 
|                                                             |                                 
|                                                             |                                 
|Earnings (Loss) from operations                              |                                 
|                                                             |                                 
|Other income and expenses                                    |                                 
|Interest income                                              |                                 
|Interest expense                                             |                                 
|Foreign exchange gain/(loss)                                 |                                 
|                                                             |                                 
|Provision for income taxes                                   |                                 
|Net Income (Loss)                                            | $                               
|                                                             |                                 
|Net Income (Loss) per Common Share                           | $                               
|                                                             |                                 
|Weighted Average Number of Common Shares Used in Calculation |                                 
|                                                             |                                 

The notes to these financial statements should be read in conjunction with

Unaudited Consolidated Financial Statements for the fiscal quarter ended March 31, 2001.

CAPITAL RESERVE CORPORATION

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2001 AND 2000

Unaudited

|                                                | For the Three Months Ended March 31,
|----------------------------------------------- | ------------------------------------
|2001                                            | 2000                                
|Cash from operating activities:                 |                                     
|Net income (loss) from continuing operations    | $                                   
|Reconciling adjustments                         |                                     
|Depreciation and amortization                   |                                     
|Exchange rate loss/(gain)                       |                                     
|Changes in operating assets and liabilities     |                                     
|Accounts receivable                             |                                     
|Loans receivable                                |                                     
|Prepaid expenses and deposits                   |                                     
|Accounts payable and accrued expenses           |                                     
|Net cash flows from operating activities        |                                     
|                                                |                                     
|Cash from investing activities:                 |                                     
|Acquisition of oil and gas properties           |                                     
|Acquisition of property and equipment           |                                     
|Expenditures on property, plant and equipment   |                                     
|Investments                                     |                                     
|Proceeds from (payments to) advances receivable |                                     
|Proceeds from investor deposits                 |                                     
|Net cash flows From investing activities        |                                     
|                                                |                                     
|Cash from financing activities:                 |                                     
|Long term debt                                  |                                     
|Proceeds from (payments to) advances payable    |                                     
|Sales of common stock                           |                                     
|Net cash flows from financing activities        |                                     
|Effect of exchange rate changes on cash         |                                     
|Net change in cash and cash equivalents         |                                     
|Cash at beginning of period                     |                                     
|                                                |                                     
|Cash at end of period                           | $                                   

The notes to these financial statements should be read in conjunction with the

Unaudited Consolidated Financial Statements for the fiscal quarter ended March 31, 2001.

CAPITAL RESERVE CORPORATION

AND SUBSIDIARY

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

THREE MONTHS ENDED MARCH 31, 2001 AND 2000

Unaudited

|                             | Class A Common Stock |            
|---------------------------- | -------------------- | -----------
|                             | Shares               | Amount     
|Balance at December 31, 1999 | 2,179,865            | $ 3,374,894
|                             |                      |            
|Issue of common stock        | 2,616,077            | 2,042,463  
|                             |                      |            
|Commissions on sales         | -                    | (64,800)   
|                             |                      |            
|Warrants exercised           | 415,730              | 415,730    
|                             |                      |            
|Shares for services          | 835,513              | 214,163    
|                             |                      |            
|Acquisition of property      | 817,050              | 408,525    
|                             |                      |            
|Net loss for the period      | -                    | $ -        
|                             |                      |            
|Balance at December 31, 2000 | 6,864,235            | $ 6,390,975
|                             |                      |            
|Net Income for the period    | -                    | $ -        
|                             |                      |            
|Balance at March 31, 2001    | 6,864,235            | $ 6,390,975

The notes to these financial statements should be read in conjunction with the

Unaudited Consolidated Financial Statements for the fiscal quarter ended March 31, 2001.

CAPITAL RESERVE CORPORATION

Notes to Consolidated Financial Statements

March 31, 2001 and 2000

Note 1-Summary of Significant Accounting Policies

This summary of significant accounting policies of Capital Reserve Corporation is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's
management who is responsible for their integrity and objectivity. These accounting policies conform to U.S. generally accepted accounting principles and have been consistently applied in the preparation of the financial statements, which are stated in
U.S. Dollars.

Organization

Capital Reserve Corporation (the "Company") was incorporated under the laws of the State of Colorado on August 3, 1982 for the purpose of operating as a financial services holding company.

From 1988 through October 1994, the Company and its subsidiaries solicited various life, accident and health insurance policies in the States of Colorado, New Mexico and Arizona. In October 1994, the Company determined it could no
longer maintain capital and surplus requirements for its insurance operations.

From 1995 through June 1996, the Company's primary business was the rental of real property. On July 3, 1996, the Company sold its sole property for net proceeds of $501,276.

In 1997, the Company, through its wholly owned subsidiary Wall Street Investments Corp (WSIC), attempted to start a financial consulting services business. As of April 10, 1999, WSIC was no longer conducting operations and was
dissolved in July 2000.

In 1999, the Company's principal place of business moved to Canada. In December 1999, the Company formed a wholly owned subsidiary, Capital Reserve Canada Limited, an Alberta corporation ("Capital Canada"), to locate and acquire
producing oil and gas assets in Canada.

As of March 31, 2001, the Company has one (1) wholly owned subsidiary, Capital Reserve Canada Limited.

Operations

Acquisition of Residential Property

In connection with a Consulting Agreement agreed to between the Company and its President, Mr. W. Scott Lawler (See "Consulting Agreements"below), the Company and Mr. Lawler agreed that the Company
would purchase a home in the City of Calgary for Mr. Lawler's personal use. The purchase price of the home was $541,241. The Company assumed a variable interest rate mortgage from ATB in the amount of $384,554 amortized over 25 years, due and payable on
May 1, 2005. On May 1, 2005, the mortgage can either be repaid or renewed with the interest rate converted to the then prevailing fixed rate. The monthly payments of principal and interest, property taxes and all other payments are Mr. Lawler's
obligation. Title to such property is in the name of the Company. Mr. Lawler provided funds to the Company in the amount of $167,842 to pay for the down payment and all closing costs associated with the purchase. The funds were provided in the form of a
subscription for shares of Capital Reserve's common stock at the purchase price of $1.00 per share. The net proceeds to Capital Reserve realized from the offering was $167,842, as this offering was made without the use of any agent or salesman and was
conducted without any costs, commissions or finders' fees.

If and when the property is sold, the Company will receive any and all gains (and/or losses) from such sale, less the cost of any approved improvements to the property paid for by Mr. Lawler. However, Mr. Lawler has the option of
acquiring title to the property (and thus all resulting gains or losses) by (a) assuming or paying off the Company's mortgage; and (b) surrendering to the Company the 167,842 shares of common stock obtained from the Company in a private placement. The
Company recognized the principal reduction of the mortgage based on the payments of principal made by Mr. Lawler.

Consulting Agreement

As of April 24, 2000, the Company entered into a Consulting Agreement with its President and a member of its Board of Directors, Mr. W. Scott Lawler, pursuant to which Mr. Lawler agreed to relocate to Calgary, Alberta, Canada,
to work at the Company's facilities in Calgary and devote more substantial time to the operations of the Company. The term of the Consulting Agreement is two (2) years, with an option on Mr. Lawler's part to extend for one (1) additional year. Mr. Lawler
will receive an annual salary of $75,000.00, plus stock options (at terms yet to be determined) and automatic annual salary increases of fifteen percent (15%). As a further inducement to Mr. Lawler to move to Calgary on the Company's behalf, the Company
purchased a home for Mr. Lawler's use. See "Acquisition of Residential Property"above.

Use of Estimates in the preparation of the financial statements

The preparation of the Company's financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in these financial
statements and accompanying notes. Actual results could differ from those estimates.

Basis of Consolidation

The consolidated financial statements include the Company and its wholly owned subsidiary, Capital Reserve Canada Limited. All significant inter-company accounts and transactions have been eliminated.

Depreciation

Depreciation has been provided in amounts sufficient to relate the costs of depreciable assets to operations over their estimated useful lives principally on the straight-line method from two to five years for office equipment
and computers and over 25 years for buildings.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents.

Earnings (Loss) Per Share

Earnings (loss) per share of common stock is computed based on 6,864,235 and 2,218,711weighted average number of common shares outstanding during the quarters ended March 31, 2001, and 2000, respectively. Fully diluted earnings
per share are not presented because they are anti-dilutive.

Risks and Uncertainties

The Company is subject to substantial risks and uncertainties inherent in the operation of oil and gas properties.

Note 2-Loans Receivable

Loans Receivable of $225,622 represents monies advanced to various unrelated corporations. These amounts bear interest calculated on the daily outstanding principal at 2% above prime rate and have no specific repayment terms.

Note 3- Investments

During the fiscal year 2000, the Company agreed with Texas T Resources Inc. to fund a portion of Texas T Petroleum Ltd. acquisition of a heavy oil upgrading technology. Texas T Resources Inc. is a majority shareholder of Texas
T Petroleum Ltd. On August 1, 2000 the Company entered into a private placement agreement with Texas T Resources Inc. for 2,000,000 units at $0.0677 per unit, each unit comprised of one share and one share purchase warrant entitling the Company to
purchase one additional share at $0.0880 for a period of two years. The Company paid cash consideration. These investments at March 31, 2001 had a book value of $126,840.

The Company also completed a share placement with Texas T Petroleum Ltd. and acquired 2,000,000 units of Texas T Petroleum Ltd. at $0.50 per unit, each unit comprised of one share and one share purchase warrant entitling the Company to
purchase one additional share at $1.00 for a period of two years. Texas T Petroleum Ltd. holds a 50% interest in the shares of Carbon Resources Limited which holds the rights to the heavy oil upgrading technology. Capital Reserve holds a 9% interest in
Texas T Petroleum Ltd. The Company purchased this interest by way of the issuance of 500,000 shares and cash consideration of $1,000,000.

Note 4- Fixed Assets

|                               | Oil & Gas Leases | Land & Buildings |                  
|------------------------------ | ---------------- | ---------------- | -----------------
|                               | Chest-ermere     | Central Montana  | 335 - 25 St. S.E.
|Oil & Gas Leases               | 654,311          | 80,128           |                  
|Land                           |                  |                  | 511,660          
|Buildings                      |                  |                  | 1,057,613        
|Office equipment and computers |                  |                  |                  
|                               | 654,311          | 80,128           | 1,569,273        
|                               |                  |                  |                  
|D D & A                        | 55,037           | -                | 24,600           
|                               |                  |                  |                  
|Net Book Value                 | $599,274         | $80,128          | $1,544,673       



Note 5- Advances Payable

Advances Payable of $229,372 are advances from various unrelated parties that bear interest at prime plus 2% and have no stated terms of repayment.

Note 6- Long-Term Debt

The Company's subsidiary, Capital Canada has a $190,260 revolving bank term loan payable on demand with the ATB. This amount has been fully drawn upon and represents $190,260 of the amount reflected on the consolidated balance sheet of the
Company. The loan bears interest at the Bank of Canada's prime rate (6.75% as of March 31, 2001) plus 1% payable on the last day of each month. The revolving credit facility is subject to an annual review and specifies no repayment terms provided certain
covenants related to the facility are met. As collateral security Capital Canada, has pledged a $3,331,000 floating charge debenture over all of its assets.

During the fiscal year ended December 31, 2000, the Company purchased a commercial property for a total purchase price of $1,519,000. The Company executed mortgage documents with Standard Life to provide $1,066,080 toward the purchase price. The
mortgage has a five year term, amortized over 15 years, at an interest rate of 8.60%. On September 1, 2005, the mortgage can either be repaid or renewed with the interest rate converted to the then prevailing rate. The Company paid the remainder of the
purchase price in cash. Monthly payments of principal and interest are $10,465. As at March 31, 2001 the mortgage balance was $997,515.

The Company assumed a variable interest rate mortgage from Alberta Treasury Branch in the amount of $384,554 amortized over 25 years, due and payable on May 1, 2005. On May 1, 2005, the mortgage can either be repaid or renewed with the interest rate
converted to the then prevailing rate. As at March 31, 2001 the mortgage balance was $356,805.

Note 7- Related Party Transactions

The last paragraph of Note 6 above involves the Company's President, W. Scott Lawler.

A company controlled by the President of Capital Canada has incurred consulting fees of $7,500 for the first quarter of the fiscal year 2001 all of which remains outstanding.

Note 8- Recent Accounting Pronouncements

In December 1999, The Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin no. 101 ("SAB 101"), "Revenue Recognition in Financial Statements." SAB 101 summarized certain of the SEC's views regarding the application of
generally accepted accounting principles to revenue recognition in financial statements. In June 2000, the SEC amended SAB 101 to acquire companies with fiscal years beginning after December 15, 1999 to implement the provisions of SAB 101 no later than
the fourth fiscal quarter. The Company adopted the provision of SAB 101 in fiscal quarter ending December 31, 2000. The Company does not expect the adoption to have material effect on its financial statements.

Note 9- Subsequent Events

An expenditure of approximately $22,505 was incurred in the current quarter for renovations on the commercial building at 1528 9th Avenue, Calgary, Alberta and an additional $200,000 for renovations on the building are expected to
be incurred over the second quarter of 2001.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL

During the three-month period ended March 31, 2001, Capital Reserve's operations were limited to passive investments in oil and gas leases, two commercial real estate buildings, an equity interest in a company that has a fifty percent
interest in a heavy oil upgrading technology and an investment in a Canadian reporting company traded on the Canadian Venture Stock Exchange. Each of these investments was acquired during the fiscal year ended December 31, 2000. Through most of fiscal
years 1998 and 1999, management disposed of most of Capital Reserve's assets and applied the proceeds from the sale of those assets to decreasing Capital Reserve's outstanding liabilities. Capital Reserve conducted a number of financings during fiscal
years 1999 and 2000. Capital from equity issues or borrowings is required to fund future operations. Therefore, the unaudited financial statements for the three-month period ended March 31, 2001; are not necessarily indicative of Capital Reserve's future
operations. As Capital Reserve Corporation is a U.S. corporation, all dollar amounts used herein refer to U.S. dollars unless otherwise indicated.

RESULTS OF OPERATIONS

As of the date of this filing Capital Reserve has limited sources of income. During the three-month period ended March 31, 2001, Capital Reserve relied primarily upon the proceeds of $85,022 from advances receivable and $36,015 from
net income to pay its expenses. Capital Reserve's net income for the period was largely due to a gain of $76,019 from foreign currency exchange. For the three-month period end March 31, 2001, Capital Reserve had a gross profit of $74,677. Comparatively,
for the same period from the previous year, Capital Reserve had a gross profit of $9,128. Capital Reserve's gross profit from the first quarter of this year were sufficient to meet its total operational expenses mainly due to the aforementioned gain from
foreign currency exchange. Capital Reserve's sources of revenue for the period in the current year were rental income of $61,654 and revenues of $63,147 from a 5% working interest in oil and gas leases and a process facility, known as Chestermere. Costs
and expenses applicable to these revenues were comprised of royalties of $5,405, production and operation of $10,927 and depletion, depreciation and amortization of $33,792.

Most of Capital Reserve's rental income is associated with a 5 year written lease agreement, which generates $12,875 in monthly lease payments, plus operating costs, and expires on August 31, 2005. Capital Reserve has 2 other written
lease agreements, which generate in the aggregate monthly rental income of $6,060, plus operating costs, and expire on July 31, 2005 and August 31, 2005, respectively.

Capital Reserve, most likely, will need to attempt to raise additional funds from equity sales, borrowings, joint ventures or merger/acquisition candidates to meet its operating expenses.

Capital Reserve's net operating loss for the three-month period ended March 31, 2001, decreased by approximately 92% compared to the same period from the previous year due to increased gross profit and a decrease in legal, accounting,
and other administrative expenses. Capital Reserve's operating expenses for the three-month period ended March 31, 2001, were comprised primarily of legal expenses of $18,750, consulting fees of $30,745, directors' fees of $10,310 and other administrative
expenses of $27,910, which is a decrease of $159,539 over Capital Reserve's operating expenses for the same period from the previous year of $172,577, which was comprised of legal expenses of $35,409, consulting expenses of $67,850, directors fees of
$7,500 and other administrative expenses of $70,946. The decrease in other administrative expenses of $43,036 in the period in the current year over the period from the previous year is mainly attributable to the elimination of $13,000 in rent since we
acquired our premises in August 2000 and a decrease of $11,000 in computer finance fees, as well as reduction in audit, accounting and other miscellaneous expenses. However, since Capital Reserve currently has limited sources of revenue, Capital Reserve's
working capital could be negatively impacted in fiscal year 2001 by operating expenses.

Management is in the process of seeking a viable project or company to acquire or with which to merge. Until such an acquisition or merger can be identified, Capital Reserve has limited sources of income. There is no guaranty that
management will be able to locate any such acquisition or merger. If Capital Reserve is able to find a suitable merger or acquisition candidate, any such merger or acquisition would most likely result in Capital Reserve having to issue a substantial
amount of stock to consummate the transaction.

LIQUIDITY

Cash flows from continuing operations during the three month periods ended March 31, 2001 and 2000 reflect net cash used of $77,912 and $376,167, respectively, while cash provided by investing activities for the same periods were
$86,228 and $409,548, respectively, and cash flows from financing activities for the same periods reflect net cash used of $82,680 and net cash provided of $459,470, respectively.

The decrease in cash flows used by continuing operations for the three months ended March 31, 2001, over the same period from the previous year is due to not making any loans during the period from the current year compared to having
made loans $786,105 during the period in the previous year. The decrease in cash flows used is also due to the fact that Capital Reserve earned net income of $36,015 for the period in the current year as compared to realizing a loss of $178,525 for the
period in the previous year.

The decrease in cash flows provided by investing activities is due to the fact that Capital Reserve received $1,169,308 in proceeds during the period from the previous year in connection with an offering of securities as compared to
having no securities offerings in the period for the current year. The decrease in cash flows provided by financing activities is due to the fact that Capital Reserve sold $252,500 of common stock and $206,970 of long-term debt during the period from the
previous year and did not have such activities in the period in the current year

Capital Reserve's long term obligations include advances payable of $229,372 from an unrelated party, a mortgage balance on its commercial building of $997,515, a line of credit balance of $190,260, a mortgage balance on the
residential property of $356,805 and a future site restoration obligation of $383. The advances payable have no stated terms of repayment and accrue

At March 31, 2001, and December 31, 2000, Capital Reserve had working capital of $99,664 and $103,798, respectively. As of March 31, 2001, a majority of Capital Reserve's current assets were in the form of loans receivable, which has
decreased by $85,022 during the quarter ended March 31, 2001. Since Capital Reserve does not have extensive sources of revenue, working capital could be depleted by operating expenses. Furthermore, if Capital Reserve should generate an operating loss for
the current year comparable to the loss incurred for the year ended December 31, 2000, Capital Reserve's remaining cash and working capital will be depleted. Capital Reserve had current liabilities of $272,956 at March 31, 2001, as compared to $283,349 at
December 31, 2000.

ASSETS

As at March 31, 2001, Capital Reserve had total assets of $4,450,481, compared to total assets of $4,499,897, at December 31, 2000. This represents a decrease of $49,416, which is mainly attributable to a decrease in loans receivables
and by an increase in accumulated depletion of our oil and gas leases. Capital Reserves assets as at March 31, 2001, consist of land and buildings of $2,253,157, investments in companies developing heavy oil technology of $1,126,840, oil and gas leases of
$679,402 (net of accumulated depletion of $37,578), cash of $22,564, accounts receivable of $70,682, loans receivables of $225,622, prepaid expenses of $53,752 and office equipment and computers of $18,462 net of depreciation of $5,035.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Not Applicable.

ITEM 2. CHANGES IN SECURITIES

Not Applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable.

ITEM 5. OTHER INFORMATION

Not Applicable.

ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K

1. Exhibits and Index of Exhibits - see Exhibit Index below.
2. Reports on Form 8-K - None.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CAPITAL RESERVE CORPORATION

Date: May , 2001

By:/s/ W. Scott Lawler
Name: W. Scott Lawler
Title: President

By:/s/ Sharon PatmoreName: Sharon Patmore
Title: Secretary-Treasurer



EXHIBIT INDEX

|REGULATION S-B NUMBER | EXHIBIT                                                                                                           | REFERENCE                                                                                                                                             
|--------------------- | ----------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1                   | Articles of Incorporation, as amended                                                                             | Incorporated by reference to the Exhibits previously filed with the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1990
|3.2                   | Amended Bylaws                                                                                                    | Incorporated by reference to the Exhibits previously filed with the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994
|10.1                  | Management Agreement with Mr. Loder                                                                               | Incorporated by reference to the Exhibits previously filed with the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998
|10.2                  | Lease Agreement dated January 15, 2000 between Capital Reserve Canada Limited and 319835 Alberta Ltd.             | Incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999                  
|10.3                  | Purchase and Sale Agreement dated March 1, 2000 by and between Capital Reserve and Stone Canyon Resources Limited | Incorporated by reference to the Exhibits previously filed with the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999
|10.4                  | Stock Purchase Agreement dated October 6, 1998 with Ralph and Patricia Newton                                     | Incorporated by reference to Exhibit 99.1 filed with Capital Reserve Corporation's Current Report on Form 8-K dated February 3, 1999                  
|10.5                  | Capital Reserve Corporation Year 2000 Employee Stock Option and Stock Award Plan                                  | Incorporated by reference to Exhibit 99.1 filed with Capital Reserve Corporation's Registration Statement on Form S-8 dated filed on March 23, 2000   

|10.6  | Lease Agreement dated August 1, 2000 between 319835 Alberta Ltd. and Toshiba of Canada Limited                   | Filed Herewith
|----- | ---------------------------------------------------------------------------------------------------------------- | --------------
|10.7  | Lease Agreement dated September 1, 2000 between Capital Reserve Corporation and Synergy Technologies Corporation | Filed Herewith
|10.8  | Lease Agreement dated September 1, 2000 between Capital Reserve Corporation and Capital Reserve Canada Limited   | Filed Herewith
|10.9  | Agreement of Purchase dated August 31, 2000 between Capital Reserve Corporation and 319835 Alberta Ltd.          | Filed Herewith
|10.10 | Credit Facility Agreement dated March 7, 2000 between Capital Reserve Corporation and Alberta Treasury Branches  | Filed Herewith
|10.11 | Share Exchange Agreement dated June 26, 1999 between Texas T Petroleum Ltd. and Synergy Technologies Corporation | Filed Herewith